Telecom Update - Canada - August 3, 2005

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IN THIS ISSUE:

** Telcos Ask Cabinet to Deregulate VoIP ** Telus Workers on the Picket Line ** Entourage Strike Ends ** Local Phone Competition Spreads ** Telecom Policy Review to Include Public Hearings ** Bell Mobility Relaunches Solo ** Telus Strike Boosts Wireless Sales ** Mitec, SR Telecom CEOs Resign ** Thieves Hit Phone Equipment Vendors ** Wireless Fuels Rogers Growth ** Aliant Sales Edge Up ** Allstream Swells MTS Revenue ** Aastra Revenue Doubles ** Hall of Fame to Debut at Telemanagement Live

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TELCOS ASK CABINET TO DEREGULATE VoIP: On July 28, Aliant, Bell Canada, SaskTel, Telebec, and Telus filed a joint petition to Cabinet asking it to eliminate the "economic regulation" of VoIP services that the CRTC ordered in Telecom Decision 2005-28 (see Telecom Update #481). The telcos want to be able offer VoIP services without filing tariffs and without restrictions on "winback" activities or promotional offers.

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** The Canadian Cable Telecommunications Association immediately urged Cabinet to reject the telcos' appeal.

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TELUS WORKERS SET UP PICKET LINES: The Telecommunications Workers Union calls it a lockout. Telus calls it a strike. What's certain is that after five years without a contract, thousands of unionized Telus employees are now walking picket lines. B.C. and Alberta courts have barred the TWU from picketing in a manner that "blocks, obstructs or impedes access" to and from Telus premises.

** Telus blocked all of its Internet customers from accessing voices-for-change.com, a website that is "run by and for Telecommunications Workers Union (TWU) members." The B.C. Civil Liberties association condemned Telus for "leveraging its power as a telecommunications service provider to censor a specific group." Telus ended the website block after an Alberta Court ordered the website to remove photos of Telus employees who cross picket lines.

ENTOURAGE STRIKE ENDS: The four-month strike by 1,400 employees of Entourage Technology Solutions, now part of Bell Canada, has ended. The union says the settlement is $3.5 million better for its members than Bell's pre-strike offer; CRTC statistics show that service-related complaints against Bell more than doubled during the strike.

LOCAL PHONE COMPETITION SPREADS: Local phone service from cablecos Shaw, Rogers, and Cogeco is now available in more areas. Shaw has begun selling Digital Phone in Winnipeg, Rogers has added six communities in Ontario and three in B.C., and Cogeco has added Three Rivers.

** Vonage Canada has begun offering local telephone numbers from Brampton and Mississauga, Ontario.

TELECOM POLICY REVIEW TO INCLUDE PUBLIC HEARINGS: The Telecommunications Policy Review Panel (see Telecom Update #482, 485) has announced two public consultations. The first, on September 9 in Whitehorse, will focus on broadband access issues. The second, on October 24-26 in Ottawa, will consider broader telecom policy issues including regulation, adoption of information and communications technologies, and productivity.

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BELL MOBILITY RELAUNCHES SOLO: Bell Mobility will launch Solo Mobile service August 2, featuring free text messaging, $1-a-day walkie-talkie service, exclusive handsets, and a free ringtone each month. The revived Solo brand targets 13- to 24-year-olds.

TELUS STRIKE BOOSTS WIRELESS SALES: MetroBridge Networks, a B.C.-based wireless broadband provider, says its volume of customer inquires has increased 15-fold since Telus workers walked out. The company says it is receiving orders from companies that are moving or setting up new offices, and from others that want back-up facilities in case of service interruption.

MITEC, SR TELECOM CEOs RESIGN: The chief executives of two Montreal-based wireless equipment makers have resigned:

** Rajiv Pancholy has resigned as President and CEO of Mitec Telecom. CFO Keith Findlay becomes interim CEO; Stefano Bazzocchi is acting CFO. Mitec has announced losses of $25 million on sales of $58 million for the year ended April 30.

** Pierre St-Arnaud has resigned as President and CEO of SR Telecom. William Aziz, the company's Chief Restructuring Officer, has been named interim CEO.

THIEVES HIT PHONE EQUIPMENT VENDORS: Toronto fraud squad investigators say that a ring of thieves has been calling in orders for quantities of business phones, collecting the orders, and paying with worthless cheques or money orders. Seven thefts have been reported; other victims are asked to call the police.

WIRELESS FUELS ROGERS GROWTH: A 47% jump in wireless revenue enabled Rogers Communications to increase second-quarter sales to $1.73 billion, 29% more than a year earlier. The wireless division, which added 125,000 subscribers, made up 56% of Rogers sales. Results include the former Microcell but not Call-Net.

** Rogers bundle discounts, formerly 15% across-the-board, now range from 5% to 15%.

** Rogers Telecom (formerly Call-Net) reports Q2 2005 revenues of $217 million, up 8% over the same quarter in 2004, with growth in both consumer and business service revenues and a 41% increase in EBITDA.

** Rogers' July 1 acquisition of Call-Net (see Telecom Update #488) triggered several change-of-control provisions, including vesting of stock options ($4.1 million) and senior executive payments ($3.4 million). The company?s agreement with Sprint (U.S.) will end September 29.

ALIANT SALES EDGE UP%: Aliant Inc. had 2Q net income of $49.8 million,

24% higher than the second quarter a year earlier, during which Aliant experienced a strike. Sales rose 1.2% to $517 million. Wireless sales increased 14%; Internet sales, 6%. Aliant says 693 employees have accepted buyout packages.

ALLSTREAM SWELLS MTS REVENUE: Manitoba Telecom 2Q revenue of $502 million was 60% higher than a year ago, before its purchase of Allstream. On a pro forma basis, revenue in Manitoba was up 4.3%, that of the national division (Allstream) down 3.9%. Net income: $111.5 million.

** John MacDonald, President of the MTS national division, returns from a medical leave August 2.

AASTRA SALES DOUBLE: Aastra Technologies, based in Concord, Ontario, had 2Q revenue of $126 million, 94% higher than a year earlier. Net income: $7 million. During this year, Aastra bought the PBX business of EADS (which includes the former Intecom); two weeks ago it paid $51 million for the PBX business of Berlin-based DeTeWe.

HALL OF FAME TO DEBUT AT TELEMANAGEMENT LIVE: The inaugural ceremonies for Canada's Telecommunications Hall of Fame will be held in Toronto on October 17, in conjunction with the Telemanagement Live conference and trade show. The first eight inductees to the Hall of Fame will be announced at a gala co-hosted by the Coalition for Competitive Telecommunications.

** Online registration for Telemanagement Live, Canada's premier annual conference on business telecom and networking, is now open at
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Participants who register before August 31 save $300 off the full conference fee.

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The information and data included has been obtained from sources which we believe to be reliable, but Angus TeleManagement makes no warranties or representations whatsoever regarding accuracy, completeness, or adequacy. Opinions expressed are based on interpretation of available information, and are subject to change. If expert advice on the subject matter is required, the services of a competent professional should be obtained.

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